June 23, 2017

Douglas County in rural Oregon recently shut its last public library rather than increase property taxes by around $6 per month per household. Less than 16 percent of the population of Douglas County has a bachelor's degree or above, making it the third least educated county on the Pacific Coast of the United States and the least educated coastal county in Oregon.

Across the Pacific, cities like Singapore, Hong Kong and Shanghai have built globally competitive workforces by investing heavily in education and infrastructure and embracing global trade. In the United States, excessive anti-tax movements have contributed to disinvestment and have slowed U.S. economic growth.

June 21, 2017

Representative Judy Chu (D-CA) (Pasadena) recently introduced H.R. 2526, the Protecting Our Students by Terminating Graduate Rates that Add to Debt (POST GRAD) Act. The bill would restore the in-school interest subsidy for graduate and professional students who borrow federal Direct Stafford Loans.

Federal in-school subsidies were terminated by The Budget Control Act in 2011, which ended the debt ceiling crisis of 2011. During the debt ceiling crisis of 2011, Congressional Republicans successfully maneuvered for large cuts to federal spending (other than military spending and pension and health benefits for retirees) by threatening to force the federal government to default on its sovereign debt unless then President Obama agreed to large spending cuts.

The POST GRAD Act would reduce the disparity between funding policy for graduate education and undergraduate education by reinstating graduate students’ eligibility for federal subsidized student loans, although graduate student borrowers, who have lower default rates, would continue to pay a higher interest rate after they complete their studies.

Christopher P. Chapman, CEO of the AccessLex Institute, estimated that the bill would save the typical law student $4,000 if passed.

If the interest rate subsidy encourages more investment in graduate education, it could more than pay for itself with higher future tax revenue.

UPDATE: The New America Foundation, which has close ties to the private student loan industry, has condemned proposals to reduce federal student loan interest rates. NAF claims that the immediate benefits of higher education financing only benefit a "small majority" of households and therefore are bad policy. New America argues that an increased military presence in Syria, Iraq and surrounding countries would be a better use of taxpayer dollars.

UPDATE 2, 6/30/2017: The New York Law Journal covers efforts to reduce student loan interest rates for graduate students.

May 07, 2017

Every 6 to 7 years, some professors are offered one semester or one year without teaching or administrative duties. Some use the opportunity to start an ambitious research project, like a book. Others upgrade their skills by taking courses toward another advanced degree. Some work in government or for a large corporation, gaining new insights into their areas of interest. Still others visit another institution, for example where important research collaborators or resources are located.

Since sabbaticals are rare events—perhaps occurring 4 times in a career or less—any individual faculty member will have relatively limited personal experience to draw upon and will instead rely on the collective wisdom of his or her peers.

What do you think are some of the best ways to spend a sabbatical and why?

April 26, 2017

Kathleen Engel (Suffolk), Jonathan Glater (U.C. Irvine), and 13 more legal scholars and economists who study higher education and consumer finance have submitted a comment letter supporting a recent proposal by the Consumer Financial Protection Bureau to monitor student loan servicers more closely. The scholars have also suggested that anonymized versions of the resulting data should be shared with researchers who can help analyze it.

Although the federal government originates and holds most student loans, it contracts with non-profits, state agencies, and private lenders to service those loans--that is, to interact with borrowers, send statements, and collect payments. The scholars expressed concerns that some servicers might not be adequately informing borrowers of the various repayment plans available to them, and could thereby be driving up defaults or financing costs for borrowers.

April 23, 2017

Elisabeth de Fontenay at Duke argues that elite law firms' expertise in sophisticated corporate transactions is self-sustaining and resistant to competition. This is in part because firms with that do the lions share of negotiation and drafting for specific kinds of transactions create, manage and retain private information about the current market for terms.

April 02, 2017

New York Times reporter Elizabeth Olson recently complained that the Dean of the University of Cincinnati College of Law was suspended after attempting to slash faculty compensation (“Cincinnati Law Dean Is Put on Leave After Proposing Ways to Cut Budget”). According to Olson, “law schools like Cincinnati [pay hefty] six-figure professor salaries that are meant to match partner-level wages.”

Olson goes on to cite the compensation of the current and former Dean of the law school. This makes about as much sense as citing newspaper executive compensation in a discussion about reducing pay for beat reporters.

Data from 2015—the latest readily publicly available—shows that law professors at Cincinnati earned total compensation averaging $133,000. A few professors earned less than six figures. Only one faculty member—a former dean and one of the most senior members of the faculty—earned more than $180,000. Including only Full Professors—the most senior, accomplished faculty members who have obtained tenure and typically have between seven and forty years of work experience—brings average total compensation to $154,000 per year.

As Olson herself reported less than a year ago, first year associates at large law firms earn base salaries of $180,000 per year, not counting substantial bonuses and excellent benefits. With a few years of experience, elite law firm associates’ total compensation including bonus can exceed $300,000. Law firm partners at the largest 200 firms can earn hundreds of thousands to millions of dollars per year according to the American Lawyer, and often receive large pensions after retirement.

March 16, 2017

Daniel Hemel and David Herzig argue in the New York Times that a Republican plan to replace a tax penalty paid by the uninsured under the Affordable Care Act with a penalty paid directly to insurance companies after a gap in coverage could thwart Republican efforts to repeal Obamacare using budgetary reconciliation procedures.